The date you purchased or started a business may affect how much of it your soon-to-be ex-spouse receives in a divorce settlement. The New Jersey courts generally consider an enterprise that you owned before your marriage as separate property.
Separate property belongs to you, and may not require dividing. A business you started while married, however, classifies as marital property; New Jersey law requires an equitable or fair division of its value. According to the American Bar Association, each spouse may hire his or her own professional to value a business and then use the determined amount as a basis for negotiation.
How may I take full ownership of a valuable business?
When both spouses contributed to a company’s start-up and growth, one spouse may need to buy out the other’s share. Similar to buying out a business partner, you may need to pay your spouse to obtain full ownership.
If cash is an issue, you may consider “trading” your share of other marital assets for your spouse’s share of the business. You may, for example, decide that keeping your business is worth trading your fair share of a house or retirement plan.
May I sell my business and then divide its proceeds?
Divorce may bring lifestyle changes, and you may wish to sell a business and move on. By obtaining a professional appraisal, you could have a realistic selling price. Your soon-to-be ex-spouse, however, may have a legal right to some of the sale’s net proceeds. The amount left after paying a business’s debt and liabilities may divide fairly between divorcing couples.
It is important to understand the difference between separate property and marital property when negotiating a divorce settlement. You also need to know what the current and realistic value is regarding your assets so that you can work out a fair division or trade arrangement.